Interview: Dr. Roberto Brasil Fernandes, Lead Counsel ABLE on the future of the Brazilian gaming market

Dr Roberto Brasil Fernandes believes "opening up gambling in Brazil will help increase the Brazilian presence in overseas casinos"

Ahead of the Brasilian Gaming congress (BgC) 11 – 12 May 2016 and the country’s potential to emerge as a major gaming jurisdiction, TotallyGaming.com interviewed Dr. Roberto Brasil Fernandes, Lead Counsel ABLE, who gave his view on efforts to legalise gambling, the key challenges and his assessment of the future of gambling in Brazil.

Dr Roberto Brasil Fernandes is also set to address “The market and opportunities for State Lotteries: New products in retail and online” on day one of BgC 2016 and Preparing to enter the Brazilian gaming market “The step-by-step" procedures and time required for each stage “

TotallyGaming.com: What is your role and that of ABLE in current efforts to legalise gambling in Brazil?

RBF: As a lawyer, I acted as amicus curiae for the defence of the State Lotteries in the Supreme Court. Whilst of course acknowledging binding precedent 02/STF (Supreme Federal Court) the Federal Constitution of Brazil does not give the Union [– the Federal Government –] the right to a monopoly on running the Lottery (Art. 177 of Federal Constitution CF/88) and therefore, strictly speaking, all states and the Federal District may exploit within their own territories (art. 53 of the LCP (Law of Penal Contraventions) the same lottery arrangements put in place by the Union.

ABLE is the only legal representative of the state lotteries, and is recognised as such by the National Congress and the Supreme Court. This means that it is ABLE's task to defend the rights of its constituents (the 26 states and the Federal District) in any bills applying to gambling and lotteries that are being debated in the Senate and the House of Representatives. The lawyer's role is to defend the rights of their client, which at this juncture is the right to ensure and expand the operation of state lotteries in Brazil.

TotallyGaming.com: Why this the ideal time to regulate gambling in Brazil?

RBF: First we should note that there are already regulated gambling operations in Brazil (the federal Lottery, state lotteries and Turf - betting on horse-racing). The more well-regarded gambling activities such as casinos, bingo, “jogo do bicho”(the “animal game”, is a long-standing Brazilian numbers game – essentially an unofficial lottery)[4], poker and others are not state-regulated but must be regulated by federal law (art. 22, XX of CF/88 and binding precedent 02/STF).
The games on this list have some very singular features; they are distinguished for example by having banked and pro-rata bets, by their particular procedures and cultural aspects, by the technologies used to control and collect bets etc.

For at least 24 years, Congress has been considering bills calling for the regulation of gambling already approved in other countries. Casinos have been banned in Brazil since 1946, and bingo and video-lotteries for just over 10 years. In the light of a global trend towards national acceptance of gambling operations as an economic activity, and the current economic crisis facing Brazil, these facts have led the Government and the National Congress – the latter by a large majority – to set up two Special Commissions.

This is the context for my answer to the question above: the creation of these Special Commissions signals that the time [is right] because it greatly reduces the time taken to pass bills – and this only happens when there is a majority interest in the subject in question. The regulatory proposal has already been approved by the Special Commission, who adopted it in December (12/2015), which is made up of Senators of the Republic involved in the “agenda of projects of strategic interest to Brazil”, the so-called Brazil Agenda, and it is awaiting a vote in plenary session. In the House of Representatives, the majority of the members of the Special Commission for the Regulatory Framework of Gambling in Brazil have made public their intention to regulate casinos, bingo, jogo do bicho and other types of gambling. So the time is right, because now gambling matters to Brazil – whether for the resulting tax revenues, investment and job creation, or in order to stimulate tourism through the casinos, or to formalise the vast black market we have here and which is growing every day with the range of gambling and betting available on the internet.

TotallyGaming.com: What stage are you at with regard to legalisation? What timetable do you anticipate for finalising this?

RBF: In my capacity as a lawyer, I am accredited by the National Congress to officially represent the state lotteries and their interests in the preparation of the draft bill. The anticipated timetable announced by the Senate of the Republic and the House of Representatives, as expressed by their respective members, is that the draft bill is to be voted on in both plenary sessions later in the first half of 2016. Drawing up and passing a law in Brazil uses the bicameral system, and the bill must be approved by the House of Representatives and by the Senate before being sanctioned or vetoed by the President of the Republic. As there are bills introduced in both Legislative Houses (proposed regulations are being considered in the Senate and the House of Representatives at the same time), whichever one adopts a bill first then refers it for review to the House that has not yet completed the work. If the legislative chamber (the Senate or House of Representatives) that receives the bill approved by the other accepts the text in its entirety and approves it, they then refer it to the President of the Republic; if they amend the text, they return that text or bill to the Senate for review, following which it goesto the office of the President for approval. If the President vetoes the bill, the National Congress can still revoke the veto and enact the law.

TotallyGaming.com: What are the main challenges you identify at present, and how they can be resolved?

RBF: The biggest challenges are undoubtedly in the business sector, which has got itself represented in the National Congress with a number of different proposals and is confusing both parliament and the government itself. The Federal Government and the parliament (Chamber of Deputies and Senate) are doing their part; there is proof of this in their creation of the two Special Commissions and in the statements issued by Ministers of the Government. The business sector and organised civil society are the ones who are the dissenting voices with regard to the model to be advocated, the types of gambling to be authorised and the specific characteristics of the possible future law. This is creating problems and delaying getting the law passed.

It's perfectly legitimate for people – whether legal or physical persons – who have an interest in getting a law passed that will regulate gambling in Brazil to take part in these proceedings; this is provided for in the Internal Rules of the two Houses of the legislature. But ideally they should do so only through business owners' associations and trades unions.

In a nutshell, as one worthy and ardent friend of mine has put it: "It's the water on the inside that sinks the boat."

TotallyGaming.com: How are legislators and ABLE going about understanding/learning about the industry in order to be sure that the right decisions are being taken?

RBF: Acting through its president and the lawyers defending it, ABLE is studying the legislation and operation of gambling in various countries. I was recently in London at the ICE Totally gambling conference, and at the beginning of the year we learned about the structure and functioning of the Estoril and Lisbon Casinos in Portugal; before that we went to Peru, Argentina, Chile and Austria, and had meetings in Brazil with several businessmen who invest in the sector. It is these experiences that translate into knowledge, and help us to make fewer mistakes in our defence.

TotallyGaming.com: What is your real assessment of the future of gambling in Brazil, and what is your ideal scenario?

RBF: My expectation is that later this year a Federal Law will be passed to regulate the operation of all types of gambling, adopting the procedures and models found to be best practice by experience in other countries.

With regard to the second part of your question, my personal answer would be that in my understanding the ideal scenario is one that ensures that gambling is run by the private sector, regulated and supervised by federal and state regulatory agencies. This ensures technological and product innovation, and demonstrates effective advertising and financial control in channelling the public resources generated from running gambling operations; this offers the community a "responsible gambling" format that is safe and healthy from the point of view of occupying people's leisure time.

TotallyGaming.com: What news can you give us about the State Lotteries? What are the opportunities for investment?

RBF: There are currently 15 states in Brazil that can run state lotteries without the need to resort to the Supreme Court to pass a law on the matter and organise the service within their territory. The other states, which had not set up a lottery before Decree-Law 204/67 was passed, do not have a federal law allowing a gambling service to be run. Although the Federal Constitution does not give the Union a monopoly on running lotteries, many states did not put Lotteries into operation after the prohibition of bingo; this ended up compromising the state laws covering that type [of gambling] together with the lotteries.

The understanding of the Supreme Court (set out in the publication of their Binding Precedent 02, 2847 ADI[5] (Ação Direta de Inconstitucionalidade – Direct Unconstitutionality Action) ADI 2996, ADPF 147), can be summed up in the words of Minister Aires Brito in ADI 2.847/DF:

"The Federal Government (“the Union”) is the body that has the power to introduce new legislation. ... However, irrespective of whether or not any given game is instituted or authorised by the central legal entity of the Federation (even if only by ordinary law), either of the two peripheral State bodies (a member State or the Federal District) can contend with the said Federal Government. Each one may, on its own territory, contend with the Central Government for the preference of gamblers ... "

At the present time there is a great deal of opportunity in the existing State Lotteries, which can run the same types of lottery operation as are run by the Federal Government, and soon there will be a large open market in the 27 states of the Federation to help Brazil grow.

TotallyGaming.com: For someone looking at Brazil's political situation from the outside, one gets the impression that the regulatory process may be delayed due to the impeachment discussions currently taking place - What is your opinion/comment on this situation?

RBF: There's no absolute certainty, but ABLE is doing its part to ensure that we get the Act passed as soon as possible. There are things we can't interfere with, and only time will tell.

TotallyGaming.com: You're going to attend the Brazilian gambling Congress (BgC) in Brasilia; what are your expectations for the event? What would you like to take away from this event, and who would you like to meet there?

RBF: I want to find out about the research being done at the University of Kent on gambling worldwide, and I'd like to know what expectations the international business community have of the Brazilian market. I want to add information to my hypothesis, which is that "opening up gambling in Brazil will help contribute to and increase the Brazilian presence in overseas casinos."

TotallyGaming.com: Is there anything else you want to add?

RBF: I am counting on the success of this event, which I'm certain will contribute significantly to passing the Regulatory Framework of Gambling in Brazil Act.

To view the opinions of Dr Olavo Sales, President of ABRABINCS (Brasilian Bingo & Casino Association), ahead of his address at BgC 2016 please click here to view the full interview.